Populate a field value in one entity with records from another entity.

Hi,

CRM NEWBIE here. :)

I have created a custom entity called "CarType" with only one text field and have added some records using a form. The reason to add this was to provide access to the specific entity for an individual to maintain car types.

Now I would like to add a field in the lead entity which lists  the records in the "CarType" entity.

I have tried this through a lookup option. 

Want to know if this is the best solution ? Or please let me know of other ways to do this apart from just adding it as an option set.

Thanks a lot!