So I've been thinking a lot about what you should and shouldn't use a loan to purchase, and honestly there are some pretty clear red flags I've learned to avoid.

Personal loans can seem attractive because the rates are usually better than credit cards and you know exactly when you'll pay it off. But here's the thing - you're still paying interest, sometimes a lot of it. That's why I'm really selective about what I'd actually borrow for.

First up: investing. I see people do this and it makes me nervous. Yeah, I'm all about investing, but taking out a loan to buy stocks or crypto? That's a no from me. If the market dips and your loan payment is due, you might be forced to sell at a loss just to pay back the bank. Plus the interest rate on the loan is usually high enough that it's almost impossible to find investments that'll outpace it. You'd need to take crazy risks, and that's not worth it.

Then there's cars. I know some people think a personal loan is fine for this, but I disagree. Cars lose value constantly, so you're already taking a hit on depreciation. Why add interest on top of that? If I absolutely had to borrow for a vehicle, I'd get a car loan instead - those rates are lower because the car itself is collateral. But honestly, I try to save up and pay cash when I can.

Buying a house with a personal loan? Yeah, that's not what you should use a loan to purchase either. Most personal loan lenders cap how much you can borrow anyway, so you probably couldn't even cover a house. A mortgage makes way more sense - the rates are lower and the interest is tax-deductible. It's just a better financial move all around.

And vacations? Come on. A vacation is a luxury, not a necessity. I'm not trying to pay interest on a trip for years after it's over. I save up first, then I go. Simple as that.

Basically, what should you not use a loan to purchase boils down to this: risky stuff, depreciating assets, and luxuries. Use loans to improve your actual financial situation or cover real essentials. Everything else? Save for it first.