As a general rule of thumb, it is best to put the little extra in each month. As you pay extra, it lowers the principal loan amount and lowers future interest accumulations. While the lump has a more dramatic immediate effect, a little each month has a much bigger impact. I personally prefer to put in a lump every month to payoff the loan in half the time, but that is just me.
The only instance when saving is more beneficial than paying extra to the loan is if your saving rate is higher than your loan interest rate. For example, if you have a savings account paying 5% and a loan interest of 4.5%, you make more saving than paying off the loan. This is a rare circumstance that might come up if rates pick up and your loan is at a fixed rate.
Read more about the science of paying off the loan at No Debt Plan.
