Can You Lease a Boat?
Before you can take the family water skiing or wakeboarding, or cruise on a yacht in the Caribbean, you’ll need access to a boat. But while you’re adding up the cost of buying and maintaining a boat, you may be wondering, “Can you lease a boat?” The answer is yes, but a boat lease usually looks more like a long-term rental rather than the more familiar car lease. We’ll explore some alternatives that make it easier to enjoy the water.
What is a boat lease?
Like a car lease, a boat lease allows you to pay for just a portion of the boat’s value rather than the entire cost. To lease a boat, the lessee makes fixed payments during a set lease term, and you may have the option to buy the boat at the end of the lease term. However, boat leases may only be available for the boating season, often between Memorial Day and Labor Day.
You may be considering a boat lease because leases usually require less money upfront and have lower monthly payments than a boat loan. And if you plan to keep the boat only for a short period of time, it’s easier to get into and out of a lease, just like with a car.
Should you lease or buy a boat?
If you’ve never owned a boat before or want to try out a different boat type, leasing offers flexibility. If you don’t like the boat or use it as much as you thought, you can walk away when the lease is over — and if you love it, you may have the option to buy the boat and keep it. Like a car lease, a boat lease typically offers lower monthly payments than ownership.
On the other hand, buying a boat offers the satisfaction of ownership — plus, depending on the boat and your situation, you may be able to claim some tax benefits, like deducting the loan interest. Similar to buying a car, owning the boat means you’ll build up equity, and you could make money when you sell it.
When you own a boat, you’re also responsible for registration, insurance, maintenance and storage fees. If you live in a climate where you can use the boat year-round, storage fees may not be necessary.
Boat leases
The advantages of a boat lease will depend on the type of boat and how you plan to use it. Leases are often available on large motor boats and yachts in the high six figures and above. Owners may offer the boat for short-term leases and charters to offset their cost of ownership.
However, long-term boat leases that provide ownership for affordable wake boats, fishing boats, cruisers or sailboats aren’t easy to find. And although leasing may be less expensive than boat ownership, it still isn’t a cheap option.
For example, a three-month rental on a motorboat from Strong’s Marine, operating on Long Island, New York, runs $32,000 to $49,000, depending on the size of the boat. Meanwhile, yacht charters can run $5,000 per week to $50,000 or more depending on the size of the boat, crew, location and season.
| Pros | Cons |
|---|---|
Lower overall cost than ownership Return vessel at end of lease Possible balloon payment at the end of the lease to purchase | Hard to find Don’t build equity Can’t claim possible tax benefits May only be available seasonally |
Boat ownership
Financing a boat is similar to getting a loan for a car or SUV. Dealers and lenders offer financing for boats with terms and interest rates based on your credit score and payment history. Shop online to compare boat loans so you can be sure you’re getting the best deal.
Boat loan rates vary but are usually higher than auto loan rates. For example, U.S. Bank offers 8.99% APR for up to 48 months on loans of $25,000 or more. Navy Federal Credit Union offers rates as low as 6.95% for new boats, while Honda Financial Services offers 5.99% APR financing for boat and outboard packages. Use a boat loan calculator to estimate your monthly loan payment.
Some lenders will finance boats up to 20 years old and some may work with borrowers with credit scores as low as 550. Check with your lender to understand the terms of a boat loan that will meet your financial needs.
| Pros | Cons |
|---|---|
Financing amounts as low as $2,500 Financing for new and used boats Long terms available for lower payments May qualify for tax benefits Fractional ownerships available | Limited to using one type of boat Boat depreciates in value Responsible for insurance, maintenance, mooring, storage and more May require down payment |
Alternative to boat leases
A boat lease that works like a car lease isn’t a common option, but there are other ways to enjoy the water without investing in a boat loan or the ongoing expenses of ownership.
Short-term rentals
Marinas often have hourly or daily rental options for boats and personal watercraft. Renting a boat can be a great choice for occasional family fun on your local lake or river. You may have to provide a deposit to cover any damage that happens while you’re in charge of the boat. The only additional cost will be the fuel you use during the rental.
Bareboat charter
A bareboat charter is used for yachts and large power boats, so if you’re qualified to operate the boat, you can be in command. Bareboat charters are usually booked by the week, and you’ll be responsible for fuel, docking and mooring fees and the itinerary.
Crewed charter
If you aren’t qualified to captain a yacht, or you’d simply prefer to leave the driving to someone else, you can hire the boat and the crew through a charter company. Some charters can be found with a captain only. For additional costs, the onboard crew will take care of cooking, cleaning and boat management.
Boat clubs
If you want to enjoy fun on the water frequently, a boat club can be a great option. Some are like country clubs, with entry fees and regular dues. You can reserve a boat to use when you want it without the expense of ownership. Check the club’s fine print to see if there are restrictions on days of the week you can use the boat or any other limitations.
Boat sharing
Like Airbnb for boats, you can use a boat-sharing app to book power boats, pontoons, personal watercraft, houseboats, yachts and fishing charters. It’s one of the easiest ways to get out on the water for a good time. When you’re done with your rental period, you return the boat to the owner.
Fractional ownership
Shared ownership is similar to a resort timeshare: You own a share of the boat and have guaranteed access for a predetermined number of days per year. Some terms may be for several years, while others are only for a single boating season. With some programs, you’re restricted to using the boat you actually own, while other programs make it easy to try different boat types and different locations.