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Your line of credit is at a good rate and you probably won't get a better rate through a consolidation loan.

Hence here's what I would do:

#1 Take money from the 8.5K to pay off the line of credit (this will reduce your debt servicing ratio when applying for your conso loan)

#2 Apply to consolidate your car loan along with credit cards.

#3 Once your loan is disbursed, take the money from your line of credit and invest the full 8.5K in RRSP to get tax deduction in 2010.

#4 set an automatic payment from your bank account to your line of credit as it was a loan.

By doing so, you will increase your chances of getting approved for your consolidation loan, pay off your debts faster with reduced rate and benefit from your RRSP tax return :-D

disclaimer: I work in a bank ;-D
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