Yes you need something on the far end past your ISP. You encrypt from your house to that remote location at the VPN provider and the ISP can not see what is passing.
It wouldn't do you a lot of good to run a vpn client on your pc and then a vpn server on your router. The data would only be encrypted in your house and would be sent to the ISP unencrypted. This is the same as a vpn provider, when the traffic comes out of the vpn providers network the data is not encrypted so if someone knows to watch at that point they can still see your data.
The vpn server function on a router is used to allow you to access things in your house when you are away from it