How to Save Money on Fuel, Food & Accommodation While Driving in Iceland

Iceland’s reputation as an expensive destination means that some travelers are understandably anxious about the cost of their vacation. While planning the trip, however, there’s plenty you can do to reduce your spend. In this blog we’ll break down into what things cost and how to stay within a reasonable Iceland road trip budget.

Estimating Your Total Iceland Trip Cost and Average Daily Spend

Good news: many of the main attractions in the Icelandic countryside are free except for the charge to park, from sightseeing along the Golden Circle to a thrilling Northern Lights hunt. In reality, therefore, the majority of your Iceland road trip budget is going to come from transportation, accommodation and food.

Tours can get expensive, so be selective and use them when it’s not possible to do an activity independently, for instance for safety’s sake.

How to Save on Flights to Iceland

Booking ahead, particularly if you plan to travel during the peak summer season, is essential if you’re to find cheap flights. This is especially true in August 2026 as the west of Iceland is in a prime location for witnessing a total solar eclipse and demand for flights is therefore even higher than usual. The most common airport to fly into Iceland is Keflavik international airport.

Compare scheduled services with low-cost airlines and remember if you can manage with just carry-on, you’ll save money. Planning to fly domestically during your road trip? Check our guide to Iceland’s airports to see which routes connect key towns and national parks.

Getting Around Iceland on a Budget

Likewise, reserving a rental car ahead and being smart about the size and type of vehicle you need is also helpful. For many routes, there’s no need to hire a 4x4, though a bigger car will of course be more comfortable if there’s several of you.

Don’t skimp on insurance; damage caused by sand and gravel can prove costly so this is one place you shouldn’t cut back. Reserving early can also help you find a cheap car rental in Iceland, especially outside peak travel months when prices drop.

Cutting Fuel Costs in Iceland

There are a number of ways you can improve fuel economy, including driving steadily to maximize your miles per gallon. Compact cars, because they weigh less, typically are most economical to run.

• Drive steadily to maximize fuel efficiency
• Choose a compact rental car for lower fuel use
• Use gas station discounts with your rental key fob
• Plan your route carefully to avoid backtracking

Another useful tip is to plan the route for your Iceland itinerary carefully so you don’t waste money on unnecessarily backtracking. Visiting in the warmer months? Read our guide to driving in Iceland during summer for tips on road conditions and weather changes.

Affordable Accommodation in Iceland

Guesthouses, hostels, and campgrounds often cost less than hotels; with a rental car you’ll be able to travel outside built-up areas to stay where prices might be lower. Dorm beds are cheap; private rooms in hostels can also be affordable.

Don’t rule out a shared bathroom, though check reviews to make sure the property scores well for cleanliness. Consider renting a small camper van or hiring camping equipment so that you can take advantage of pitches in scenic spots. Here is the approximate price rances for accommodations in Iceland:

• Budget: $50–100 USD (hostels, guesthouses, camping outside Reykjavik)
• Mid-range: $120–200 USD (nicer guesthouses, smaller hotels)

How to Spend Less on Food

It’s surprising how quickly costs can add up if you are paying for breakfast, lunch and coffee stops each day, particularly if your credit card comes with a foreign exchange fee.

Here are the averages prices you can expense for food and drinks in Iceland:

• Budget: $25–50 USD (grocery store meals, gas-station food)
• Mid-range: $60–120 USD (mix of restaurants and groceries)
• Pro tip: Iceland’s tap water is pure and free so skip bottled water

Look for accommodation which includes breakfast at no extra cost and do a grocery shop at a budget-friendly store such as Bonus or Krónan to stock up on snacks for the road.

Pack a picnic – you can eat it in the car if the weather’s a bust – and make use of the hot, filling but cheap fare available at gas stations. Refill your drinks bottle; Iceland’s tap water is pure and free.

Budget-Friendly Hot Springs and Geothermal Pools

Iceland’s geothermal lagoons are world-renowned but admission can be costly – though you can seek out less popular slots. Switch out the top-tier places such as Blue Lagoon and Sky Lagoon in favor of more affordable ones. For instance, look to the north: it’s cheaper to soak in Forest Lagoon and Mývatn Nature Baths. Alternatively, opt for free hot springs such as Reykjadalur’s hot water river.

Managing your Iceland road trip budget doesn’t have to be hard, especially if you’ve dreamed of renting a car and looping its famous ring road. It’s absolutely possible to enjoy Iceland’s natural wonders without overspending.

Enjoy Iceland Without Overspending

Traveling through Iceland doesn’t have to drain your wallet. By booking flights early, choosing the right rental car or camper van, shopping at grocery stores, and swapping pricey attractions for budget-friendly hot springs, you can stretch your Iceland road trip budget further.

With thoughtful planning, you’ll still experience the magic of waterfalls, glaciers, and volcanic landscapes, just without the financial stress. Iceland rewards smart travelers, letting you focus on the journey, not the costs.

FAQs About Managing an Iceland Road Trip Budget

What is the average cost of an Iceland road trip per day?

On average, travelers spend between 150–250 USD per day, depending on accommodation choices, fuel, food, and tours.

Can I save money by renting a camper van instead of booking hotels?

Yes, camper vans can cut accommodation costs, though you’ll need to compare fuel and rental prices against hotels or guesthouses.

Is food expensive in Iceland for road trippers?

Dining out is pricey, but grocery stores like Bonus and Krónan help you save by stocking up on affordable snacks and meals.

Do I need travel insurance for an Iceland road trip?

Yes, comprehensive travel insurance is highly recommended to cover rental car issues, medical needs, or unexpected trip changes.

Are there free alternatives to the Blue Lagoon?

Yes, Reykjadalur hot spring river and local swimming pools are cheaper or free options compared to luxury lagoons like Blue Lagoon or Sky Lagoon.