I understand that from code clarity and manageability perspective it is better that my Entity class does NOT talk to it's DAO.

Now for this scenario (example):
Let us say I have a Car entity and car has CarType (which is also an entity).
When a new car is created Car entity needs to get it's CarType set on it as a member variable. So either the Service/BO/Manager (whatever we refer it) CarService class find CarType object and set on to Car object. Or just pass car type id in constructor or Car and let Car object pull CarType entity object from DAO and set onto itself.

What are recommended ways of doing it? Is there any other better way?

Thank you for thinking with me.