Derived from Sanskrit:
Sanskrit is the ancient language used to be spoken during the last eras in the area around Nepal and India. According to some historical analysis, Nepal might have been derived from the Sanskrit word ‘Nipalaya’, which certainly means ‘at the foot of the mountains’ or ‘abode at the foot’, which describes the location of Nepal in relation to the Himalayas and mountains.
Two words Ne and Pal:
Some historians also believe that Nepal was derived from two words, ‘Ne’ and ‘Pal’ meaning ‘wool’ and ‘tented house’.Nepal being the land of the Himalayas, yak, and sheep, was rich in wools and those wools were stored in the tented houses back then so it was called Nepal.
Derived from Newari:
Newari is a traditional language used to be spoken by Newars (a group of peoples original Kathmandu native. They are believed to be the early inhabitants of the valley, long before the unification process). According to this Nepal was derived from the Newari word, Nepa, the old name for the Kathmandu valley. This theory gives the most strongest point after the Sanskrit theory for how Nepal got its name.
Read: Meaning of Nepal Flag