Three Jervis Bay residents were on their way home when an "overwhelming" smell of fuel filled the car.

The driver pulled over to inspect possible causes but couldn't find anything suspicious and continued the journey.

Not long afterwards, on the corner of Manning Street and Farmer Street, the car caught alight and flames were coming up from the bonnet.

A passenger recalled "it sounded like a gun shot and then we looked forward and the whole bonnet was up in flames".

Another passenger said the engine begun to "melt into the dash" and had sealed the bonnet shut.

The driver pulled over and all passengers got out of the car to search for water to extinguish the fire.

With the help of two people who pulled over, they managed to put out the fire with a hose from a residental property close by.

Firelighters were at the scene attempting to identify the cause of the explosion Roads remained open and traffic was not affected.

No one was injured.