A self-drive car sharing service has launched in Hamilton as the city council aims to provide more transport options.

Waikato company Loop has signed an agreement with the council to provide a car sharing service in Hamilton for three years, a move council chief executive Richard Briggs described as exciting.

The cars are Volkswagen Golf, based near Waikato Museum on Victoria St, but users can also find them using Loop's phone app.

Users must download the app from the Google Play or Iphone store to book a car, from there users are able to drive the car around Hamilton at a cost of $15 an hour.

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The car has insurance cover, but a $1000 excess will need to be paid if the driver damages the vehicle.

"It's really exciting to support the delivery of another mobility solution for our businesses and the wider Hamilton public," Mr Briggs said.

"To be able to do this in partnership with a Waikato based company that is immersed in our community really ticks all our boxes.

"Loop is a simple solution to a common problem and it's one that can contribute to easing congestion and improving sustainability."

Hamilton is the latest city to get on board with car sharing. Loop allows users to book, access, drive and pay for a vehicle through the phone app.

Loop said the average vehicle owner used their car for only about 4 per cent of the time it was owned.

Car sharing, which is huge in Europe and North America, connects customers to communal vehicles that are parked in convenient spaces around town, allowing them to be used on a pay-by-the-minute basis.

Members who have the app and have gone through an initial sign-up process can simply take these cars and return them on completion of their journey.

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The app then bills a pre-registered credit or debit card for the time you had the car.

Loop general manager Jamie Russell said: "By placing cars around town or in business parking spaces, then making them available to everyone, we can share the cost of ownership and start to combat the aggravation we all feel in having our second most expensive asset sitting idle for 95 per cent of its life.

"Some of our early customers are telling us they're more inclined to cycle to work now with the reassurance of having access to a vehicle should they need it throughout the day.

"Some are also tempted to give up their second car and just use Loop vehicles as they need them."

More vehicles will be added in the next few months, he said.