I'm not sure if I'm interpreting your question correctly, but this might help:
Whenever you are paying off a loan that is using a simple interest method (for example, hire purchase), the interest is always calculate based on the amount of the initial loan.
For example, a home loan of $500,000 will earn HEAPS of interest at the start of the loan, but when it gets down to the last few payments when, say, only a few grand is left to pay, not much interest at all is being generated by this loan.
Conversely, a simple interest loan of the above amount (this would never happen, but just for my example's sake) would be generating just as much interest in the last few payments as it would be at the start.
This is why hire purchase is a sucky way to buy stuff
So to answer your question (i think) when you do simple interest calculations after a payment or two, you will still use the normal simple interest formula, but the principal will be $20,000 still, not however much is actually left to pay at the time of calculation.
Does that help?