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If you love cruising the open waters, fishing or just docking-and-dining, buying a boat may seem like a great idea. While costs vary significantly depending on the type of boat you want, you can expect to pay anywhere from $15,000 to $75,000 for the average new vessel, and upwards of $100,000 for a more luxurious model. Although taking out a boat loan can make it easier for you to finance your purchase, there is more to the cost of owning a boat than the initial price tag. You also have to consider the maintenance costs, boat insurance, fuel costs and potential taxes.
How much does a boat cost?
New boats cost an average of $42,000, while the average price for a used model is $10,000. However, these figures can vary greatly depending on the size and type of boat you’re in the market for.
What’s the right boat for me?
The best boat for you will depend on how you intend to use it, the area where you intend to go boating and your budget. For example, if you want something you can use for water sports, a speed boat would be a good choice; but if you’re looking for something to take out into the ocean and go fishing, a fishing boat or cabin cruiser could be your best bet.
Yearly boat maintenance typically costs about 10 percent of the cost of the boat, though that can vary depending on the type of boat and how often you do maintenance. Average boat insurance rates are around 1.5 percent of the boat’s insured value, but exact rates depend on the insurance company and the area you live in. You should also consider the cost of getting a trailer, safety items, winter storage and other miscellaneous costs.
For reference, here’s a breakdown of the average cost of a new boat by type, to help you crunch the numbers.
Financing a boat
The best time to buy a boat is typically in the fall, right after summer. Most manufacturers start advertising discounts in September or October and continue to do so into the winter months. Purchasing your boat during the off-season could help you cut costs significantly and avoid taking on any debt.
Even if you find a boat at a discounted price, you may need help financing it. After all, used models typically sell for about $10,000, which isn’t exactly pocket change. If you need to borrow money to cover the cost of your boat, there are several options. The most popular ways to finance your boat are through a boat loan, a personal loan or financing through a dealership.
A boat loan is a type of personal loan used to purchase a boat. Boat loans are fixed-rate installment loans, meaning that you will make the same monthly payments throughout the life of your loan. You typically need a credit score of 680 or higher to qualify for a lender’s best rates, though some lenders may approve you with a lower credit score. However, applying for a loan with a lower credit score will result in a higher interest rate.
There are secured and unsecured boat loans. If you take out a secured boat loan, the boat itself is used as collateral. You could lose your boat if you do not make your monthly payments. Unsecured boat loans do not require collateral, meaning you will not lose your boat if you default on your payments. However, unsecured loans usually have higher interest rates than secured loans, and getting behind on payments will cause damage to your credit score.
If you are considering a boat loan to finance your new boat, you should compare lenders, get quotes from your top choices, and calculate your monthly payments before making a final decision.
Similar to a boat loan, personal loans are fixed-rate installment loans. A personal loan is a good financing option if you have a high credit score and a steady income stream. They can be used for virtually any purpose, and some have low interest rates for good to excellent credit borrowers.
Because personal loans tend to be unsecured, you do not have to worry about losing your boat if you don’t pay it off. However, you should calculate your monthly payments and make sure you can comfortably afford them before making a final decision.
Marine financing through a dealership is the most convenient boat financing option. Dealerships sometimes offer perks like manufacturer deals and rebates, and you don’t have to search for loans from alternative lenders. However, this option tends to be a lot more expensive. Loans from dealerships have higher interest rates and longer repayment periods than other loans. Besides this, many dealerships require you to give a downpayment of between 10 and 20 percent of the boat’s value, which is something to consider.
When you buy a boat, you have to consider maintenance costs, potential repair costs, and the cost of fueling and operating a boat.
Maintenance and repair costs
Typically, annual boat maintenance costs about 10 percent of the cost of the boat itself. For example, a boat that cost $20,000 to purchase would cost roughly $2,000 a year to maintain. Some examples of typical boat maintenance include painting the hull, cleaning the deck, replacing broken or worn down parts and winterizing the boat to protect it from the elements during the off-season. Like a car, boats require regular maintenance to reduce wear and tear.
Fuel and operating costs
You must also consider fuel costs, especially if you have a larger boat. Smaller boats typically just take regular or premium gasoline, while larger vessels may require diesel, which is more expensive. You can avoid fuel costs if you get a sailboat, which is entirely wind-powered, but most other boats require fuel. You should research the fuel needs of the boat you want to buy before making a purchase.
Additional operating costs for a boat include oil changes, batteries, a pump and lights. Just like a vehicle, these elements should be checked and replaced regularly.
Boat insurance, taxes, certifications and registrations
When you buy a boat, you also have to get boat insurance, get your boat registered and potentially get certified to drive it, depending on the state you live in. Some states also charge boat taxes, so research your local requirements before buying a boat.
Here is a breakdown of these costs:
- Boat insurance costs around 1 to 5 percent of the boat’s value. So, using the example above, the average annual cost of insurance for a $20,000 boat would be between $200 and $1,000 a year. That said, for insurers, boat values are dependent on several safety factors. These include the type of boat, the condition of the motor, whether the boat meets safety standards, the age of the boat, your location, your driving record and the boat’s intended purpose. For example, it would be more expensive to insure a deep ocean fishing boat that is in poor condition than it would be to insure a brand new cabin cruiser that you intend to take out on the lake.
- Boat taxes are required in some states. If your state charges a boat tax, you will have to pay this tax once a year. There may also be a one-time sales tax at the point of purchase.
- Certifications and registration. The exact cost of boat registration varies by state and the type and size of your boat. There is also typically a small yearly charge to renew your registration. Registering your boat allows you to drive it legally through public waterways. You must keep your registration documents on the boat with you, and they should be placed according to the laws of your state. Some states require you to take a boater certification course to operate a boat. However, each state has its regulations, so whether you have to do this and how much it will cost depends on the state you live in.
Other cost considerations
Additional costs associated with boat ownership include the cost of storing your boat, the cost of a trailer, safety necessities and miscellaneous items such as water sports equipment.
Storage and mooring
An important but often overlooked element of owning a boat is properly storing it. Most people do not use their boat year-round, and you have to have somewhere to store your boat during the winter months.
There are a variety of boat storage options. Indoor storage is more expensive because it offers tighter security and you do not have to worry about winterizing the boat to protect it from the elements. Outdoor storage is more cost-effective and can be more convenient in certain climates, but since your boat will be exposed, you’ll likely spend more on maintenance to keep it in good shape.
Storing your boat in your garage or driveway is likely the cheapest option. However, you will likely have to buy a trailer and winterize the boat. Note that Homeowners Associations sometimes have rules about parking boats in driveways, so make sure you are allowed to do so before settling on this option.
Here is a pricing breakdown of the most common boat storage options:
|Dry stack storage
Protects boat from weather
Less expensive than a marina
|You can’t get your boat whenever you want
More expensive than home storage
|$5-$30 and up/ft/month
|You don’t have to rent a trailer
Ready to go when boating season starts
Potential damage from being outside
|Self storage facility
|Easy to find one near you
Easy to pick up and drop off
|More expensive than other options
Boat is vulnerable to the elements if you choose outdoor storage
|At home storage
|Boat trailer cost: starts at $500
Immediate access to your boat
|Exposure to the elements
Must winterize your boat
In order to get your boat to the water, you need to have a boat trailer and a vehicle that can tow it, such as a truck. These costs can vary depending on the size of your boat. A boat trailer can range from $500 to over $10,000.
In addition to a trailer and a towing vehicle, you must invest in your boat’s required safety equipment. This includes a fire extinguisher, enough life jackets for every passenger, a flotation device, a visual signaling device and a sound signaling device. The exact safety equipment you need can vary by state, but these are the basics. Having a medical kit and flashlight is also a good idea. Depending on the size of your boat, having paddles on board in case of emergency could be beneficial.
Additional cost considerations
Once you buy your boat, there will inevitably be accessories you want to splurge on that aren’t strictly required. Budgeting for these things ahead of time is a good idea to avoid overspending. You may want to invest in water sports equipment, dry bags to keep your valuables safe, waterproof electronics, fishing equipment or other items that make the boating experience more pleasurable. Before shopping for these items, create a budget to ensure you get the most out of your experience without going over budget.
The bottom line
Buying a boat is an exciting adventure, but it is also costly and time-consuming. There are so many extra costs outside the initial buying price, and you must stay on top of maintenance and repairs to keep your investment in good shape. Before buying a boat, consider all these costs and write a cost estimate/yearly budget. It is important to ensure you can handle all of the costs associated with having a boat before buying one.
Choosing a financing option like a boat loan, personal loan, or dealership financing could help you plan some of the costs. However, you can avoid taking out a loan by saving up instead, buying a used boat for a lesser cost or splitting the cost and sharing the boat with a trusted friend or family member. Whichever option you choose, make sure that you do your research and come up with a plan before making any decisions.