My Webster's New world Dictionary does not contain the word "loaned" at all, but my Thesaurus does, and the word "lent" is the first synonym listed. My wife, who learned English as a second language and therefore often speaks it better than I do, insists "lent" is more correct than "loaned" as the past tense verb form. Which is more correct?
They are two different verbs: "to lend" is conjugated "lend, lent, have lent", and "to loan" is conjugated "loan, loaned, have loaned".
According to Merriam-Webster, the verb to loan has died out in the U.K. This is corroborated by Google Ngrams, although it now appears to have been reintroduced from AmE. Thus, for BrE, your wife is correct. For AmE, both lent and loaned are fine.