Renting a boat is a must on Rab Island - there are dozens of secluded coves and inlets and ice-blue waters just begging to be explored!
The first thing you must go to in order to rent a boat is acquire a Croatian Captain's License. This is not as tricky as it seems. Just go down to the Harbormaster's office (Lucka Kapetanija) located on Obala Kralja Petra Kresimira (the road which runs along the harbor) -- towards the end of the road (and the end of the peninsula) you will find this office. A license costs about $15 USD.
Once you obtain the license, you are ready to hit the high seas. We rented our boat (a small 4-seater with steering wheel) from the Numero Uno Travel Agency on Obala Kralja Petra Kresimira, which is located right at the head of the harbor and only steps from the Hotel Istra. The helpful young staff rented us the boat for about $27 USD, and we had use of it from about 9:00 a.m. to 8:00 p.m. They only ask that you don't go within a specified distance from shore (I think it was a mile), and that you don't attempt to travel to other islands. That's OK, though, because there is plenty to see just sticking to the Rab's coastline.
With a picnic lunch in tow, we swung around Rab Town's peninsula and were afforded incredible views of the town walls, which soar up over 100 feet from the water. The famous four bell towers were an awesome sight from the water. We putted along the bay and checked out the monastery of St. Eufemija before heading out to see the island's unpopulated west coast, which is jagged with inlets and secluded coves. Several times we anchored in a cove and went ashore to lay on a tiny, private stone beach, or just lay on the bow of the boat. We also snorkled in the crystal clear, bluer-than-blue water (which was also freezing cold - we brought our own snorkeling equipment). The super-clean water is alive with fish, crustaceans, and dolphins.
We will never forget this very special experience. I highly recommend renting a boat on Rab!