Leasing a car privately is a newer habit in Iceland than in Scandinavia, but it has grown fast. Instead of buying with a loan, a driver pays a fixed monthly fee for a car that is one to three years old, and the rental company takes care of servicing, tyre changes and resale. For many retirees this is attractive: no large deposit, no surprise repair bills after a hard winter, and no need to sell an ageing car later.
In Icelandic the product is usually called langtímaleiga (long-term rental). It is different from rekstrarleiga, the operating lease aimed mainly at companies, and from kaupleiga, a hire-purchase contract that ends with you owning the car. This guide explains how long-term rental works for drivers over 60, what it really costs compared with a loan, what the rental company checks before it hands over the keys, and which pitfalls to avoid.
How long-term rental works in Iceland
The main providers are car dealers and rental groups that run dedicated long-term fleets. Höldur, the company behind Bílaleiga Akureyrar, offers contracts from 3 to 36 months, with 12, 24 and 36 months the most common, and monthly mileage allowances of 1,500, 1,750 or 2,000 km. Brimborg rents new and used cars to individuals for a minimum of 12 months; its monthly fee covers everything except energy, washer fluid and cleaning, and payment is taken by credit card. Contracts can usually be signed at the showroom or online.
Because the car remains the rental company's property, a long-term rental is not a loan in the legal sense. That has two consequences. The rental company does not run the full payment assessment required for larger consumer loans, though it does ask for confirmation of your ability to pay. And the protections of the Consumer Credit Act do not automatically apply, so you must read the contract itself on mileage, damage, early termination and insurance excess.
What the monthly fee covers and what it leaves out
| Item | Long-term rental | Car bought with a loan |
|---|---|---|
| Deposit | None or small | Usually 15–20% of the price |
| Servicing and inspection | Included in most contracts | Paid by you |
| Seasonal tyre changes | Often included or bookable | Paid by you |
| Insurance | Usually included, with an excess on damage | Bought separately |
| Fuel or charging | Paid by you | Paid by you |
| Resale risk | Borne by the rental company | Borne by you |
| Ownership at the end | No | Yes |
Checks the rental company makes
Expect to show a valid driving licence and to give permission for a look-up of your Creditinfo record. A pensioner with a clean score and regular income is generally accepted without difficulty. An active default entry, which Creditinfo registers once at least ISK 50,000 has been overdue for 40 days, is the most common reason for a refusal. Some companies also ask for a card with enough limit to cover the monthly charge plus any excess.
Age and insurance
Providers publish no upper age for the driver. Insurance is included in the fee, but the excess you pay after damage can be significant, and some contracts allow you to reduce it for an additional monthly charge. If a spouse or adult child will also drive, ask whether they are named on the contract.
Is renting cheaper than buying? Three cases
Ásdís, 68, Kópavogur. She drives about 1,200 km a month and wants an electric car without worrying about battery value. A 24-month rental of a compact electric SUV at around ISK 185,000 a month comes to ISK 4.44 million over two years, with service and tyres included. Buying a similar car for ISK 6.5 million with a ISK 4 million loan over seven years at 10.85% would cost about ISK 68,200 a month in repayments, plus insurance, service and tyres, and she would still carry the resale risk. For her, renting costs more in pure krónur but removes every surprise.
Kári, 73, Húsavík. He drives 2,500 km a month across the north-east. The highest standard allowance of 2,000 km a month would leave him paying excess-mileage charges, so buying a used four-wheel-drive outright with savings was clearly cheaper.
Ragnheiður, 66, and Stefán, 70, Reykjavík. They spend the winter in Spain and need a car only seven months a year. A shorter contract of six months, then a break, beat owning a car that would sit idle in the driveway for five months.
Mistakes that turn a rental into an expensive one
- Choosing a mileage band below your real driving and paying excess charges at the end.
- Assuming insurance has no excess, then paying a large share after a gravel-road windscreen crack.
- Signing a 36-month contract when health or travel plans may change, then facing early-termination fees.
- Ignoring the return condition rules, which can lead to charges for scratches and interior wear.
- Forgetting that a rental, unlike a loan, builds no equity you can draw on later.
- Comparing only the monthly fee instead of the total over the contract, including charging and excess options.
How to choose and sign a contract
- Estimate your monthly mileage from the last year of fuel receipts or odometer readings.
- Check your Creditinfo score and make sure there is no active default.
- Ask at least two providers for written offers on the same car class and term.
- Compare what is included: insurance, excess, tyre storage and changes, servicing and roadside help.
- Read the early-termination and mileage clauses line by line.
- Photograph the car at collection and keep the delivery report.
- Diary the return date and book the final inspection in advance.
When a hire-purchase deal makes more sense
If you want to keep the car beyond three years, kaupleiga or an ordinary car loan is usually better value, since you stop paying once the debt is cleared. Our page on car loans for seniors in Iceland compares lenders' limits and rates.
Alternatives to a long-term rental
- Buy a nearly new car outright: retirees with savings avoid both interest and rental margins.
- Short car loan with a big deposit: low loan-to-value tiers carry the best rates.
- Seasonal rental: renting only for the summer touring months can beat year-round costs.
- Car sharing in Reykjavík: for occasional trips in the capital area, pay-per-use schemes and taxis may be cheaper than any contract.
- Family vehicle arrangements: sharing a car with a relative and splitting costs in writing.
Leasing questions from older drivers
Can I rent long term at 75 or 80? The main providers publish no maximum age. They check your licence and payment ability, so a valid licence and a clean credit record are what count.
Does a long-term rental appear as debt on Creditinfo? It is not a loan, so it does not show as borrowing in the same way, but the provider can still check your record and report unpaid invoices if you fall behind.
What happens if I can no longer drive during the contract? Most contracts allow early return against a fee. Ask before signing whether illness or loss of licence changes that fee.
Is the price tax-inclusive? Consumer prices in Iceland are normally quoted with VAT, but confirm whether road tax and other charges are included in the monthly amount.
Can I switch to a different car mid-contract? Some providers allow an upgrade or a change of model by agreement; it usually restarts the contract term.
Organisations and offers to contact
- Höldur – Langtímaleiga : Long-term rental from the company behind Bílaleiga Akureyrar: contracts of 3 to 36 months with set monthly mileage bands.
- Brimborg – long-term car rental : Brimborg's long-term rental for individuals and companies, minimum 12 months, with an all-in monthly fee except energy and cleaning.