In a recently published webmaster video, Matt Cutts Google’s head of search spam team indicate few points of when to use disavow tool. Here the points are mentioned below:
1. When you get a manual action.
2. Webmasters won't remove the bad links to your site or want to charge you to remove them.
3. When you are worried about negative SEO.
4. When you see links pointing to your site and you do not want to be associated with.
5. When you saw a bulk link attack and are afraid it might hurt your site.
6. When you are afraid someone will submit a spam report about you.
7. When you see your rankings dropped and you think it has to do with an algorithm Google ran, i.e. Penguin algorithm.
8. Links that cannot remove.
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