I'm a very responsible person who would take even more care of someone else's car than my own and make every effort to return it to them shiney clean and full of gas. But I wouldn't ask someone else to loan me their car because I would consider it my responsibility to cover that expense.

I've only loaned out my car once and I'll never, ever do it again.

Hopefully, your husband will be prepared to tell his sister that he spoke out of turn and he agrees with you that it isn't a good idea. A small donation towards the rental of a car might help to smooth things over, but it shouldn't be much.