Well the repair tool is primarily used for fixing vehicles, so I first damage one and drive it close to the location that I'm going to. Fix the car like you usually would and keep the repair tool equipped after. The game will let you walk around the world with it still equipped and you can use it to set things ablaze; trees; bushes; people; and animals. Not sure about undamaged vehicles, but I did set a person on fire by using the repair tool at their head while they were in a vehicle..lol
Just be aware that once you switch it out for different weapon you'll have to find a damaged vehicle again to bring it out for use.
on pc there is a button for the repair tool.
nothing on console?