Loalwa Braz was the lead vocalist for the international hit song released by French group Kaoma in 1989.
A police official said Braz, 63, was found in the coastal district of Saquerema near Rio de Janeiro, where two men were seen
Brazilian media said the singer`s body was found totally burned inside the car near her home.
Firefighters arrived outside what is though to be her home on Thursday at 3.40am local time in Brazil.
Local media outlet Globo reported the crew were working on extinguishing a fire in the property which had gutted the attic when they realised there was a body in the burning car.
The commander said: `It was to contain the flames that consumed a car.
`Inside the car the team identified that there was a charred body and a new call was triggered.
Two men were spotted at the singer`s house, close to where the body was found, according to Globo.
At this stage, no link has been made between a break-in and her death.
Braz`s hit La Lambada was used by Jennifer Lopez in her 2010 hit On The Floor.
The Spice Girls were also influenced by the tune, and mentioned the Lambada by name in their 1998 single Spice Up Your Life.
She performed with Brazilian greats such as Gilberto Gil and Caetano Veloso.
She lived in France for several years in the 1980s.
Her hit song featured in an advert for the soft drink Orangina.
`It is sad. She was a warm and likeable person,` said another Brazilian singer who knew her, Ricardo Vilas.
`But she was also fragile and suffered a lot of difficulties.`
`Lambada` Singer Loalwa Braz murdered in Brazil
21 January 2017
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The singer of Latin pop hit La Lambada has been found dead in a burned-out car in her native Brazil.
