Owning a boat is a dream come true for most people, but it can be economically challenging for those who are unprepared. There’s more to it than simply shopping around for boat loans and getting the best price. That’s just the beginning of the costs associated with boat ownership. Make sure you’re prepared for the following before you sign the purchase agreement:

1. Purchase Price

Boats can range from a few thousand to several million dollars if you want an ocean-cruising yacht. The most obvious question buyers need to ask is whether they can afford the payments on the boat they want. Boat loans can be long-term (10-20 years), so monthly payments should be lower than what you pay for a car. Figure out what you can comfortably afford.

2. Insurance

Take that monthly boat loan payment and add an annual insurance payment to it. The national average for boat insurance in the United States is 1.5% of the boat’s value. For a $20,000 speedboat, that’s $300 a year. States that regularly see hurricane activity may have higher rates. States with shorter boating seasons may be more affordable.

3. Storage

You could park the boat in your yard if you have that option, but boat owners in colder climates typically prefer a climate-controlled boat storage facility. These vary in price, so shop around for the best rates. On average, it will cost you about $2,000 a year. There’s also the option of moving the boat to a warmer climate for winter, but then you have transportation costs.

4. Taxes

This is a cost you’ll need to research independently because boat tax rates are different in every state. Rhode Island doesn’t have one, but good luck finding an open mooring. South Carolina charges 10.5% if the boat is in the state for more than half the year. The federal luxury tax on boats worth over $100,000 was repealed years ago, so there is no need to worry about that.

5. Mooring fees

Oceans and lakes don’t come with public parking lots. There’s always a mooring fee for leaving your boat unless, of course, you own some waterfront property. Marinas charge anywhere from a few hundred a year for small boats to $1,000 or more a month for larger vessels. This is another topic to research if you plan on leaving the boat in the water.

6. Maintenance

Plan on spending 10% of the boat’s value on maintenance each year. That doesn’t include repair costs if something breaks down. Hopefully, a regular maintenance schedule can help you avoid that. This includes cleaning and painting the hull, scouring the deck, tuning up engines, and replacing sails if needed. Hiring a professional to do all this is recommended.

7. Equipment

Spend at least $1,000 on safety equipment when you first buy the boat. That includes life jackets, floatation devices, fire extinguishers, flares, signal flags, and a horn. Other equipment, like fish finders and advanced navigation systems, are optional—budget for them when you’re able. Upgrading the boat’s technology could increase its value.

8. Fuel

Yes, we saved the best for last. Boats with engines need gas and oil, both of which have increased in price recently. If you can’t afford the fuel, don’t buy a boat that requires it. Canoes and rowboats are fun. So are sailboats. You could even opt for a personal watercraft (PWC) like a jet ski. They still burn gas, but at a far slower rate than that big speedboat you want.

The Bottom Line

The costs of owning a boat can be significant, but they can also be worth it if you enjoy spending time on the water. Make sure to do your research and factor in all the potential costs before making your decision.

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