Lets say your loan payment is $100 a month.
What is the differences between:
- making a regular payment for $120
- making a regular payment for $100 plus an additional principal reduction payment for $20
Is it the same thing?
Choice 1 will likely make the payment due and also apply $20 to the next month's payment due. So you'd owe $80 in month 2.
Choice 2 will make the payment due and then lower the principal by that $20. At 6% over 30 years, that $20 will knock off more than $100 off the last payment due.