What is the right place for the vendor folder created by composer

Hi,

thats my folder structure:

Code:

- application
- system
- public
- vendor (created by composer)

I installed some packages through composer. After that, composer creates a folder named vendor in the root of my project. Could the vendor-folder be created also in the application folder or should the vendor-folder where it is now? what is the best place? There is also a third_party folder in application. What is this folder for?