Forward local traffic to other ip using iptables

First of all you have to enable route_localnet for the kernel to not consider source loopback address as “martian” while routing, see: ip-sysctl.

$ sudo sysctl -w net.ipv4.conf.all.route_localnet=1

Let’s transparently send all udp dns traffic to 1.1.1.1 instead.

$ iptables -t nat -A OUTPUT -p udp --dport 53 -j DNAT --to-destination 1.1.1.1:53
$ iptables -t nat -A POSTROUTING -j MASQUERADE

Or send all traffic targeting port 65000 in localhost to 192.168.0.1:80

$ sudo iptables -t nat -A OUTPUT -p tcp --dest 127.0.0.1 --dport 65000 -j DNAT --to-destination 192.168.0.1:80
$ sudo iptables -t nat -A POSTROUTING -j MASQUERADE

Worth to mention that OUTPUT chain will have effect only for traffic originating locally.